Portfolio

What is Portfolio? — Definition

A portfolio is the totality of your investment holdings. Modern Portfolio Theory (developed by Harry Markowitz in 1952) demonstrated that combining assets with low correlation to each other can reduce overall risk without proportionally reducing returns. This is the mathematical basis for diversification — 'don't put all your eggs in one basket' quantified.

A well-constructed portfolio considers asset allocation (stocks vs. bonds vs. alternatives), geographic diversification, sector exposure, and individual position sizing. Most professional investors limit any single stock to 2–5% of their portfolio, though conviction investors like Buffett run more concentrated books.

Example

A 70/30 portfolio (70% stocks, 30% bonds) historically delivered strong long-term returns while meaningfully reducing volatility compared to a 100% stock portfolio. During the 2008 financial crisis, a 70/30 portfolio lost roughly 25% versus ~37% for a pure equity portfolio.

BMInsider's Portfolio Tracker lets you aggregate all your holdings in one dashboard, see your real-time allocation breakdown, track performance against benchmarks, and receive alerts when a position becomes too large relative to your targets.